Malaysia won’t go bankrupt like Sri Lanka, finance minister tells MPs – even as its China palm oil exports tumble
- Malaysia’s budget has been strained by inflation-relief efforts, with a surge in government subsidies putting the country at greater risk of default
- Zafrul Aziz’s assurances on Tuesday came as the commodities minister warned that Malaysian palm oil exports to China will continue to be subdued
“The IMF has never said that Malaysia is facing economic troubles that could bankrupt the country,” he said in parliament on Tuesday. “If we compare our economic indicators with Sri Lanka, it is clear our economy is far more stable than theirs.”
Still, the government must continue to manage the country’s finances prudently and control the level of debt, he said.
A Bloomberg gauge of one-year default probability showed Malaysia at 2.43 per cent compared to Sri Lanka’s 19.4 per cent, with a reading above 1.5 per cent signifying high risk of failure to pay.
The Southeast Asian nation, whose budget is strained by inflation-relief efforts, is expected to fork out a record 77.3 billion ringgit (US$17.6 billion) in total subsidies this year, with concessions on fuels and cooking gas alone projected to touch 37.3 billion ringgit, Zafrul said last month.
The jump in palm oil and crude oil prices this year is expected to generate tax revenue of 10 billion ringgit for the country, Zafrul said on Tuesday, adding that the government will also garner an additional 10 billion ringgit from income and indirect taxes as economic growth is expected to be stronger in the second quarter of this year.
Even so, higher revenues would be insufficient to cover the surge in government subsidies, he said.
